DLGP

Doctor of Leadership in Global Perspectives: Crafting Ministry in an Interconnected World

Cautionary Tales: Polanyi’s The Great Transformation

Written by: on February 1, 2017

I recognize from the outset that I am stepping far outside of my comfort zone to discuss economics and economic social history. Yet the foundational understanding for how goods are perceived and exchanged is inextricably intertwined with other aspects of our daily life—religion, politics, philosophy, etc. How, then, do we attempt to understand Karl Polanyi’s The Great Transformation[1] both when it was initially published, and in light of today’s events?

Polanyi suggests that the modern era experienced an economic shift that went hand in hand with the coalescing of national identity. Where once emerging economies of the nineteenth century remained stable, the transformation occurring throughout the early twentieth century precipitated massive social upheavals. These were not isolated events, but were the inevitable consequence of utopian market society, initially identified with a balance of power, the international gold standard, self-regulating markets, and the liberal state.[2] This liberal market economy was based on the fictional capital of labor, land, and money.[3] And, it was unsustainable, according to Polanyi.

Contemporary Cautions

When reading a complex work such as this, I am curious about its contemporary relevance. What I come away with are three points worth noting: first, his analysis against fascism; next, the modern dangers and consequences of the neoliberal market of today, especially within the African context; and finally, his hopefulness on the freedom introduced by Jesus and attainable in modern society.

Fascism Rising

While Polanyi was certainly not a capitalist, neither was he a communist. He was influenced more by Max Weber than Marx, yet does not fit into our simplistically drawn economic system boundaries. But he was most certainly opposed to fascism. As an Austrian immigrant first to England then North America, he argues that the rise of fascism during his time was due, not to a single factor or issues within a single nation-state,[4] but to reaction to a “market society that refused to function.”[5] It was as if the uncontrollable rubber band of the free market society was stretched too far and fascism stepped in to adjust it and relieve the tension: The fascist solution of the impasse reached by liberal capitalism can be described as a reform of the market economy achieved at the price of the extirpation of all democratic institutions.[6] This was not just the “fault” of the failed German state, but was fostered by global circumstances. But fascism deteriorates. As Polanyi notes in his final chapter, the Old Testament gave us knowledge of death, Jesus gave us knowledge of freedom, and living in an industrial society gave us knowledge of society. “The fascist answer to the recognition of the reality of society is the rejection of the postulate of freedom,” he acknowledges. “The Christian discovery of the uniqueness of the individual and of the oneness of mankind is negated by fascism. Here lies the root of its degenerative bent.”[7]

Today’s Neoliberal Markets

In the introduction, sociologist Fred Block notes that “neoliberals embrace the same utopian vision that inspired the gold standard.”[8] Neoliberalism, a modern take on laissez-faire capitalism, has shown itself globally to increase the wealth of the already wealthy, and perpetuate neo-colonial poverty in less affluent countries. Among African countries, for example, religious historian Elizabeth Isichei notes that the “cash nexus” of neo-liberal markets “has shaped new concepts of the witch as a zombie-owning entrepreneur, or as the consumer of prosperity, rather than of life force.”[9] Likewise, Kenyan novelist Ngugiwa Thiong’o suggests that Western neoliberalism became powerful by “eating the flesh and drinking the blood of workers” for the sake of development and as a sacrifice “to the god of money”[10] This is especially evident in the neo-colonial aspects of the IMF and World Bank in Africa. If neoliberalism is truly a descendant of the free market laissez-faire economy of the discarded gold standard, then it, too will ultimately be unsustainable, as Polanyi suggests was the case for the modern free market society.

Hopeful Freedom

Polanyi argues that removing the imagined commodities of land, labor, and money would prevent the market from being self-regulated and allow society to control the market.[11] A free society would be regulated and planned, but always allow the right of non-conformity. Some would argue that “free enterprise and private ownership” are “essentials of freedom,” and that “planning and control” are “a denial of freedom.”[12] Polanyi responds, “regulation and control can achieve freedom not only for the few, but for all.”[13] Perhaps that understanding of freedom is the root of Polanyi’s solution to the failed market society, and also what many capitalists would critique. He argues that this “reality of society” is not truly economic, but “moral and religious.”[14] As he has pointed to throughout the text, Polanyi does not believe market capitalism anything more than an impossible utopia. Fascism and socialism are the reactions against it, and fascism is morally degenerative. As Polanyi challenges, “the discovery of society is thus either the end or the rebirth of freedom. While the fascist resigns himself to relinquishing freedom and glorifies power which is the reality of society, the socialist resigns himself to that reality and upholds the claim to freedom, in spite of it.[15] Polanyi would encourage us to not fear the regulation and structure of a social market; there is no loss of freedom in it. Quite the contrary, he would argue. Regulation would encourage more freedom and provide “guarantees against victimization.”[16] I am not fully ready to jump on Polanyi’s ideas yet, but am willing to affirm that market regulations provide potential control that actually allows more freedom… for all. As one of my favorite authors eloquently puts it,

In your language you have a form of poetry called the sonnet…There are fourteen lines, I believe, all in iambic pentameter. That’s a very strict rhythm or meter…And each line has to end with a rigid pattern. And if the poet does not do it exactly this way, it is not a sonnet…But within this strict form the poet has complete freedom to say whatever he wants…You’re given the form, but you have to write the sonnet yourself. What you say is completely up to you.[17]

[1] Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Boston: Beacon, 1944, [2001]).

[2] Ibid., 3.

[3] Ibid., 76.

[4] Ibid., 246.

[5] Ibid., 248.

[6] Ibid., 245.

[7] Ibid., 268.

[8] Ibid., xxxiii.

[9] Elizabeth Isichei, Voices of the Poor in Africa (Rochester, NY: University of Rochester Press, 2002), 153.

[10] Ngugiwa Thiong’o Devil on the Cross (Johannesburg: Heinemann, 1987), 89.  Thanks to Dr Kip Lines for resources helping me understand the implications of neoliberalism in Africa.

[11] Ibid., 259.

[12] Ibid., 265.

[13] Ibid.

[14] Ibid., 267. Block put it this way: morally, “it is simply wrong to treat nature and human beings as objects whose price will be determined entirely by the market,” for “nature and human life have almost always been recognized as having a sacred dimension.” xxv.

[15] Ibid., 268. emphasis mine.

[16] Ibid., 266.

[17] Madeline L’Engle, A Wrinkle in Time, (New York: Farrar Straus Giroux, 2012), 199.

About the Author

Katy Drage Lines

In God’s good Kingdom, some minister like trees, long-standing, rooted in a community. They embody words of Wendell Berry, “stay years if you would know the genius of the place.” Others, however, are called to go. Katy is one of those pilgrims. A global nomad, Katy grew up as a fifth generation Colorado native, attended college & seminary and was ordained in Tennessee, married a guy from Pennsylvania, ministered for ten years in Kenya, worked as a children’s pastor in a small church in Kentucky, and served college students in a university library in Orange County, California. She recently moved to the heart of America, Indianapolis, and has joined the Englewood Christian Church community, serving with them as Pastor of Spiritual Formation. She & her husband Kip, have two delightful boys, a college junior and high school junior.

8 responses to “Cautionary Tales: Polanyi’s The Great Transformation”

  1. Stu Cocanougher says:

    Great job evaluating a very challenging text. The book was focused on the West – Europe and North America. You are right to connect these theories to Africa.

    Africa has so many natural and human resources, yet the continent is almost synonymous with poverty and failed economies. I believe that there are fare more perils that affect the nations there than just economic models.

  2. Deep thoughts…When it comes to contemporary cautions, I might add, using people as a commodity to further progress.
    Agreed, I’m not ready to jump on his plan either. Especially since he was never able to enact it, and he’s going to have to be a lot more concrete as to HOW he sees his vision being accomplished.
    I liked your quote by your favorite author.

    • Katy Lines says:

      Absolutely! Polanyi is especially critical of capitalism’s treatment of humans and land– as if they are consumables to be used and discarded.

      I also ran into your conundrum of how his plan would play out, so I searched for journal articles that pursued his ideas, but came up dry in my searches. So if anyone has actually found ways to accomplish his vision, I didn’t find them.

  3. Geoff Lee says:

    Isn’t this the way of the gospel, Katy? Ultimate freedom always has restrictions, boundaries, iambic pentameter. Self-regulating, unfettered capitalism leads ultimately to greed and the enrichment of the few at the expense of the many. Americans, in particular, are allergic to any intervention or control, it seems. The Scandinavian models seem a little more balanced, with the welfare of the many taken into consideration.

    • Katy Lines says:

      I was really hoping you’d respond in verse, Geoff. 🙂

      Yes, I absolutely agree that this is the way of the gospel; the gospel which gives us freedom within its boundaries. I had actually included something like that in my (already too long) post but removed it because I know many American Christians are still quite wary of the possibility of some socialist ideas being compatible with our understanding of the gospel. But it’s not hard for me to see some harmony.

  4. Mary Walker says:

    Katy, I always love reading your evaluations and your illustrations. They add so much to the reading each week.
    I wish with all my heart that Polanyi was right, but I think that history has shown that socialism may be a utopian dream as well as “self-regulating” free market.
    You hit on a main point though – some regulation can ensure more freedom for all. He talks a lot about the Industrial Revolution for example. Many business owners had to accept new laws restricting them from employing little children, long hours, degrading wages, etc..
    And, we need to decide what ‘freedom’ is.
    As usual, you gave me so much food for thought!

  5. Katy,
    Loved this post! First, I should have read it before I posted – as your thoughts helped me to a much better understanding of Polanyi.
    I also really appreciate your consistent ability to translate what we are doing into an African context (which is important for me, but I have less experience with).
    I think I agree with you about socialism…. and, to be blunt it has always confused me why so many American Christians seem to recoil from ideas found in socialism that they celebrate when found in Christianity.
    I too, agree with Geoff’s point that our Scandinavian sisters and brothers seem to have found a better balance of socialism and capitalism – precisely by valuing the welfare of all above the highest individual profit (and/or the lowest individual tax)…. There is a whole different course in figuring out why this has taken root in societies that are, essentially post-Christian, but not ours, which most still identify as connected to Christianity.

  6. Katy, your assessment is so good. The depth of your evaluation really helps to show the pros and cons of Polanyi’s ideas, as well as the mess we find ourselves in.
    I am going to jump on board with Geoff and Chip to agree that the Scandinavian countries do a much better job than we do because of their blend of socialism and capitalism. Do they get it all perfect? No. But the way many Americans associate socialism with communism makes it difficult to even have a discussion about what democratic socialism looks like.
    This comment broke my heart: “Likewise, Kenyan novelist Ngugiwa Thiong’o suggests that Western neoliberalism became powerful by ‘eating the flesh and drinking the blood of workers’ for the sake of development and as a sacrifice ‘to the god of money.'” This is such a damning critique of what the western industrial complex has done.

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